The objective of financial reporting is to provide useful financial information to primary users; that is, the general purpose financial information provided by financial reporting must be useful to investors, lenders and other creditors who need this information to make resource allocation decisions.

There are four elements of financial reporting: (1) recognition (when items should be incorproated into the financial statements), (2) measurement (what value items should be recognized at), (3) presentation (how items are agreggated and presented on the financial statements) and disclosure (what information that isn't included on the financial statements is relevant and reliable enough to warrant disclosing it in the notes to the financial statements?).

The full disclosure principle states that any information that is material, but is not reported in the financial statements, must be disclosed in the notes to the financial statements. It is because of this principle that often many pages of notes are included with a companies financial statements. Information that is material is any information that is capable in making a difference in the decisions made by the users of the financial statements (see: The Materiality Principle).

Examples of things that must be disclosed include the significant accounting policies that the firm uses,1 and information about related party transactions, default, liens, and the like according to S-X Rule 4-08, General Notes to the Financial Statements.2

Martin Myers owns Myers Construction Co. The company maintains accounting records for the purposes of exercising control over its construction activities and meeting its reporting obligations regarding payrolls and income tax returns. As it has no other financial reporting obligations, Myers does not prepare formal financial sta

21) The full disclosure principle, as adopted by the accounting profession, is best described by which of the following?
A. Enough information should be disclosed in the financial statements so a person wishing to invest in the stock of the company can make a profitable decision.
B. Disclosure of any financial facts sign

For each of the following, state whether you think the disclosure of information was appropriate. Defend your position and post it to the group discussion board.
A young woman, who states she has just been raped, comes into the emergency room requesting a pelvic examination and a morning-after pill, but she insists that the